Journal of Applied Finance & Banking

Economic Analysis of Judicial Conciliation in Brazilian Financial Institutions

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• Abstract

   

  The present work aims to analyze the economic efficiency of judicial conciliation in defaulted credit contracts, through a case study of a major Brazilian financial institution, between the years 2014 and 2019. From the perspective of the economic analysis of law, this study analyzes the efficiency of conciliation in collective settlement events organized by the Federal Court, using three methods of assessment: maximization of gains and minimization of costs, Pareto efficiency, and the Kaldor-Hicks criterion. The results indicate that conciliation, when successful, demonstrates economic efficiency; however, as a public policy, it does not achieve indices compatible with the advantages stemming from its adoption. These findings contribute to the scientific literature that studies alternative dispute-resolution methods by providing empirical evidence for financial institutions and policymakers in the sector.

   

  JEL classification numbers: K10, K12, K15, K41.

  Keywords: Economic Analysis of Law, Pareto’s efficiency, Kaldor-Hicks criterion, Judicial Conciliation, Economic Efficiency.